However I do have another question: In early 2001, we put $4,000 in Roth IRA's, buying shares of the Nasdaq 100 (QQQ's). Beacause our AGI was much higher than we estimated, we need to sell the shares and withdraw the funds, which is now worth about $2,800 (ouch!)

If you decide to go the non-deductible traditional IRA route instead of the Roth, you may simply recharacterize the Roth contributions as traditional contributions. It may not be necessary to sell the underlying investment, depending on your custodian's requirements.

--Peter